European markets ended in the red on Friday, after the fallout from a global IT outage sapped risk appetite.
The FTSE 100 index ended down 49.17 points, 0.6%, at 8,155.72. The FTSE 250 ended down 166.48 points, or 0.8%, at 21,067.68, and the AIM All-Share fell 3.54 points, 0.5%, at 784.13.
For the week, the FTSE 100 fell 1.2%, the FTSE 250 shed 0.6% and the AIM gave back 0.3%.
The Cboe UK 100 ended down 0.8% at 812.70 on Friday, the Cboe UK 250 lost 0.9% at 18,354.97, and the Cboe Small Companies ended flat at 17,353.73.
In European equities on Friday, the CAC 40 in Paris fell 0.7% while the DAX 40 in Frankfurt lost 1.0%.
The pound was quoted at $1.2915 late on Friday in London, lower than $1.2972 at the London equities close on Thursday. The euro traded at $1.0885, lower than $1.0908. Against the yen, the dollar was quoted at JP¥157.36, up versus JP¥156.70.
In New York, the Dow Jones Industrial Average was down 1.1%, while the S&P 500 and the Nasdaq Composite lost 0.6%.
Analysts at ING commented: ‘We’re looking for stronger GDP data and a 0.2% month-on-month core PCE deflator print in the US next week – which should keep current Fed rate cut expectations firmly in place.
‘The core CPI print was just 0.1% month-on-month, but some of the PPI inputs into the PCE deflator, such as portfolio fees and transport, favour 0.2%. Even so, this would be tracking at the run rate required to deliver 2% year-on-year inflation over time and should keep those interest rate cut expectations in place.’
Elsewhere, next week’s economic calendar has a slew flash purchasing managers’ index readings on Wednesday. Monday’s economic calendar has a German retail sales reading at 0700 BST.
Focus across the Atlantic will also be on politics next week.
Stocklytics analyst Neil Roarty commented: ‘It’s been a tough week for US stocks, as uncertainty surrounding the US election continues to influence trading. A little over three months out from the vote, investors would expect a clearer picture of two different paths Americans might choose in November. Instead, they’ve witnessed an assassination attempt and ongoing debate over whether the president’s name will even appear on the ballot. Traders on prediction markets currently say there’s a greater than 80% likelihood that Joe Biden steps aside before the vote.
‘It has broadly been a positive 2024 for the markets, with the Nasdaq up 20% for the year so far. But traders crave stability, and those gains are at risk if this already chaotic campaign escalates even further.’
In London, British Airways owner International Consolidated Airlines Group and easyJet fell 2.2% and 2.1%.
UK transport networks were thrown into chaos by the global IT outage. There are long queues at airports, while trains are also disrupted because of the problem.
Gatwick – the second busiest airport in the UK – issued a warning over delays at check-in desks and security. There are long queues at Luton Airport, while Edinburgh Airport warned wait times are extended.
Bridgepoint advanced 6.1%.
The London-based private equity investor reported first-half results ahead of expectations, as it prepares to complete its £835 million acquisition of Energy Capital Partners.
Assets under management totalled €42.7 billion on June 30, up 8.1% from €39.5 billion a year before. Pro forma AuM including ECP came to €67.3 billion. Pretax profit excluding ECP was £48.8 million, down 8.1% from £53.1 million a year before. Pro forma pretax profit including ECP was £99.9 million.
Underlying pretax profit excluding ECP, however, was up 57% to £78.7 million from 50.0 million, as underlying management fees excluding ECP rose by 25% to £156.0 million from £124.6 million a year before.
Spirent Communications fell 1.8%. The Crawley, England-based test and assurance solutions provider said its performance in the first-half of 2024 has been ‘impacted by the ongoing industry-wide slowdown’, as well as some ‘customer hesitancy’ following a takeover offer.
At the end of March, Spirent agreed to a £1.16 billion takeover by Keysight Technologies, a Santa Rosa, California-based manufacturer of electronics test and measurement equipment and software.
‘In the second quarter we experienced delays to contract placements as customers digested the information whilst pleasingly note no order cancellations,’ Spirent said.
Spirent said first-half revenue fell 12% on-year to $197 million, though the impact on profit was ‘somewhat mitigated in part by effective cost actions implemented in the last 12 months’.
‘The outcome reflects some customer order delays, particularly in China where both trade compliance challenges and softness in the economy continue. EMEA delivered good order growth in the first half but, as a smaller part of our portfolio, it was not large enough to offset weakness in other regions,’ it said.
‘We expect challenging market conditions to continue in the second half, which we expect will be reflected in our near-term performance.’
Permanent TSB rose 5.4%. It announced the sale of a non-performing loan portfolio to Mars Capital. The deal is part of a consortium arrangement with Mars Capital and certain funds managed or sub-advised by Apollo Global Management.
The deal boosts Permanent TSB’s common equity tier one ratio by around 35 basis points, and its total capital ratio by 45 basis points.
‘This transaction also alleviates the negative capital impact of regulatory calendar provisioning associated with this Portfolio, which based on existing risk weights and capital requirements is equivalent to €2 billion of new lending,’ it added.
The portfolio, which comprises 1,244 loan accounts secured on 1,489 properties, has a balance sheet value of €348 million.
Chief Executive Officer Eamonn Crowley said: ‘PTSB is undertaking this transaction to ensure that we remain a strong and resilient competitor in the Irish retail banking market, offering much needed choice to customers. Like other retail banks, PTSB is required by regulation to hold additional capital for non-performing loans, meaning that the amount that can be lent to first time buyers and other personal and business customers would have been impacted if this transaction had not occurred. As a result of today’s announcement, we will be able to free up capital that will be used to support up to €2 billion of lending into the Irish economy.’
Surface Transforms jumped 60%, as the producer of carbon‐ceramic automotive brake discs hailed a ‘recent significant increase in daily output levels’.
It said output doubled in the four weeks to July 12, against the average delivered over the previous five months.
Its sales guidance for 2024 remains in line with market estimates of £17.5 million.
‘We will continue to grow, and our planned rate of growth is not without risk, but the board believes that we also remain on track to deliver market estimates for 2025 including £28.0 million sales, positive Ebitda and operational cash generation,’ it said.
CEO Kevin Johnson added: ‘The recent significant increase in daily output levels, over several weeks, is most encouraging both in terms of its consistency and recent output levels. Capacity constraint is diminishing as a production impediment, thanks to the reduction of the single points of failure problem. We acknowledge that production yields, whilst improving, are still below plan. However the issues are understood, we expect to overcome them, and we are now building these further improvements from this higher baseline.’
Brent oil was quoted at $84.04 a barrel late London on Friday afternoon, down from $84.99 late Thursday. Gold was quoted at $2,404.10 an ounce, lower than $2,465.41.
Monday’s UK corporate calendar has a trading update from Glasgow-based cloud computing and connectivity provider Beeks Financial Cloud Group.
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